Ghana’s Chamber of Mines advocate for revenue management law

The Ghana Chamber of Mines has reiterated its willingness to partner with government to implement a revenue management law for the mining sector that caters adequately for key stakeholders particularly host communities and generations unborn. According to the group, without a clear policy instrument analogous to the Petroleum Revenue Management Act (Act 815), mining industry revenues will continue to be treated as a source of funds for consumption. “Coming as we know from a finite resource, we will surely wake up one day and ask what happened to all the revenue from the mining industry. The refrain will be oh! We did not get enough from the mining industry. As intimated earlier, such excuses do not hold any longer if we do not get our act together as a country,” Mr Sulemanu Koney, a Director at the Ghana Chamber of Mines commented. Currently, corporate tax payment from the mining industry has outstripped mineral royalty. Indeed information from the Ghana Revenue Authority indicates that the mining industry’s position as the leading contributor to domestic tax collection is largely on account of the large payment of corporate tax from the sector. To put this in perspective, the Ghana Revenue Authority collected about GH1.46 billion from the mining industry in 2012, representing 27percent of its domestic collection in the year. The payment of GH893.77 million in corporate tax for the same period also representing 36.98percent of total corporate tax collected. According to Mr Koney in the absence of the revenue management law for the mining sector, the worry is that the huge amounts being accrued from the sector will go into consumption without a portion set aside for posterity. Large scale mining and the Mine Support Services sub sector employs about 27,000 people. An estimated 500,000 people are engaged in the small scale gold, diamonds, sand winning, quarry and salt industries. Total foreign direct investment into the minerals and mining sector, from 1983 to 2012 amounted to some US$13.5 billion with total gold production at all time high of 4.2 million ounces. Like the mining sector, the contribution of the new oil and gas sector to the economy cannot be overemphasized. In terms of revenue contribution, the total oil and gas receipt at the end of 2012 was US$541.62 million (equivalent to Gh978.32 million) representing 6.6percent of domestic revenue and 1.4percent of Gross Domestic Product. The Ghana EITI has so far produced nine EITI reports in the mining sector and one for the oil and gas sector in order to make revenue information on the extractive sector available to the general public. The findings and recommendations from these reports are significant. According to Major (Rtd) M S Tara, Chief Director at Ghana’s Ministry of Finance, government has taken seriously the recommendations of the earlier EITI reports and implemented most of them. The recommendations of the EITI reports have informed a wide range of policy reforms in the mining sector. Particularly, they have led to the review of mineral royalty payments from a range of 3-6percent to a fixed rate of 5percent; an ongoing upward review of ground rent; increase in the corporate tax rate from 25 percent to 35 percent; the replacement of the previous 100 percent capital cost recovery with a uniform capital allowance regime of 20 percent for five years, all with a view of ensuring equitable returns from the sector to the people of Ghana, the resource owners. Major (Rtd) Tara indicated that increased transparency and accountability is the fundamental cornerstone of the EITI. Advocates of the transparency believe that governments who disclose their incomes from oil, gas and minerals are much more likely to spend those resources wisely. This means that more children can get education they deserve; more mothers can receive the healthcare they need; more young people can find jobs to be able to escape poverty. Furthermore, EITI advocates also believe that effective implementation of the initiative will ensure that less money will be lost to corruption, because people can access the information needed to hold their governments and companies to account.